Written evidence to be reported to the House
Energy Bill
12:00 pm
Allan Asher: Ten seconds on that question, and then I shall turn to the question that you asked me. The £9 billion is not the companies’ money but consumers’ money. That is where it comes from. In a highly competitive market, the companies should be investing that £9 billion on low-carbon infrastructure, as intended, and nobody would complain if they did that. However, it is obvious that some companies are returning material portions of the money to shareholders. That should not be happening. The money should be competed away, and in an efficient market they would not have to claw it back, because competition would force them to lower their prices. In a competitive market, companies would not be able to get away with giving shareholders sums of money above the long-term average cost of production of the power.
The second question, which is on social tariffs, is an important one. Again, the companies are not spending billions on energy efficiency. The money comes from consumers. It is part of the energy efficiency commitment, which is a sum levied on everyone in this room who pays gas and electricity bills, and it is going up to around £60 per consumer. It will come from us, and the companies will direct it more or less to energy efficiency measures.
The scheme has been really good. It has saved a huge amount of carbon, but do not for a moment think that the money is company money—it is consumers’ money. Until now, there has been a target requirement that about half of it should be spent on measures for fuel poor customers: insulation, light globes and so on. There will be a bit of a change in the future. The money—not all of it—plays an important part in poverty alleviation. It is highly complementary to social tariffs, not in competition with them.
There are many ways in which we currently levy consumers for various things. Consumer prices, the climate change levy, the energy efficiency commitment and the European energy trading scheme—all of those come from consumers. Why is it only when we talk about some direct sum to the most grindingly poor in society that we find it offensive that money should be directed to them? I am puzzled by that.